You're Trying to Tame an Entirely Different Beast

As America transitions from four decades of supply side economics to a new world of demand side economics, at least two generations of Wall Street players are sure to be fighting yesterday's battles to little avail. 

In other words, the "Greenspan" boys and girls who came of age (like I did) with the likes of Fed Chairs Greenspan and Bernanke, then Yellen and the dovish version of Powell, to save the day time and time again just when markets looked to be on the precipice of destruction are in for a rude awakening. 

So what is so different this time around?

Much like a high level poker game, The Fed already subtly betrayed its hand via a "tell." Simply put, The Fed was very recently entertaining notions of the boundaries of MMT and pushing climate change and other social directives without a care in the world for inflation and its consequences as Jay Powell maintained his defiant "transitory" mantra. 

And, now, just a few short months later, The Fed has announced an aggressive tapering schedule, balance sheet reductions and rate hikes to come soon enough--That's the tell. They blinked and blinked hard and only did so because, behind the scenes, they likely have become aware of the actual inflation numbers and how damning they are for the majority of Americans. And let us also dispose of the 800 pound elephant in the room: The midterm elections are coming up this calendar year, with inflation likely the top or top two issue. 

Costco trading at a PEG over 4 and PE in the 40s? I was way too early in thinking COST had topped, but that's just it--The sheer extension of some of these names like COST HD LOW and the FANG types renders them sitting duck as the market finally become accepting of the new world we are in. 

Booking, for example, which used to be Priceline.com, below on its weekly chart, has been a holdout of late as many folks bet on the re-opening. But as that trade abates and likely has been discounted, we are left with a stock specializing in travel in a new world where business travel lags and recreational travel may suffer from inflation, pandemic restrictions and labor issues (e.g. cancelled flights), stimulus checks running dry, etc.. I am looking for the highlighted topping pattern to come to fruition. 

Bulls are trying to tame an entirely different beast this time around, one where even if we do see a deeper correction from here in equites The Fed's focus on cooling off inflation means they may not be so quick to bail out the Greenspan boys and gals.